Critical Condition

This Dinosaur Just Can’t Be Changed

More than 550 amendments were filed late Friday to the Senate Finance Committee’s health-reform bill, but, short of starting over, it will be impossible to make enough changes to turn this dinosaur into a race horse.

The committee will begin voting on amendments on Tuesday, with Democrats trying to move it even further to the Left and Republicans hoping to slow the march toward government control over our health sector.

Senate Finance Chairman Max Baucus hoped he could win bipartisan support by getting good reviews from the Congressional Budget Office.  He spent much of the summer working with the CBO to figure out how to squeeze his health-reform bill into its scoring framework.

To no one’s surprise, he succeeded.  The CBO ruled that his bill will lead to a “net reduction in the federal budget deficit of $49 billion” over the next 10 years and that 94% of Americans will have health insurance.

But the contortions that the bill takes to get that bottom line turn the bill into a monstrosity. Futher, it relies on revenues and savings that are fictitious.

For example, the bill requires individuals to buy health insurance, and taxes them up to $3,800 a year for a family if they don’t comply. The CBO assumes that people will continue to pay the fine year after year, estimating the federal government will collect $20 billion in penalties over six years. (The mandate doesn’t trigger until 2013, right after the next presidential election.  Surely, that’s just an odd coincidence.)

And the CBO also assumes that employers will get increasingly stupid, paying more and more in “free-rider penalties” every year, adding up to $27 billion in fines by 2019. This is a penalty for employers who don’t follow the mandate to provide expensive government-designed Cadillac coverage to their workers.

We can see where this leads.  Massachusetts assumed that a chunk of revenue to pay for its universal coverage plan would come from employers who didn’t comply with the state mandate to provide or pay for health insurance for employees. But companies decided to comply rather than break the law, and collections came in below estimates.

So the state upped the ante, making it more difficult for companies to meet the coverage text so it could trap more of them into paying the fine.  The game continues.

The onerous individual mandate, employer fines, and new taxes in the Baucus bill are only the beginning of the heavy burden that the bill will impose on the U.S. economy.

And it will absolutely add to the deficit, despite the CBO’s claims.  That’s because the bill calls for more than $500 billion in savings and “efficiencies” from Medicare, Medicaid, and other federal programs.  Congress is absolutely incapable of making the hard choices necessary to achieve these savings.  To make up the budget cap, it will either have to raise taxes or add further to the soaring deficit.

There is a ray of hope in the House.  Some conservative Democrats are approaching Republicans to see if they might be open to working on an alternative health reform bill. At least that’s the word from Rep. Bill Cassidy (R., La.), a physician who represents Baton Rouge in Congress.

Many conservative Democrats are in a terribly difficult spot. After the fiery town-hall meetings back home in August, they know their seats could be at risk if they support the 1,000-page, $1.5 trillion, big-government health-reform bill their leadership is pushing through the House.

But they also know, as do Republicans, that they must be FOR something. Let’s hope that Speaker Pelosi doesn’t hear about this. Heaven forbid that we might have a sensible bipartisan compromise brewing among the people’s representatives.

 – Grace-Marie Turner is president of the Galen Institute.